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Sponsorship Costs for Fireworks Displays Skyrocket

Post-9/11 Security Measures Heavily Impact Pyrotechnics Industry

NEW YORK (AdAge.com) -- Like wearing shoes through airport security and strolling ID-free into a Manhattan office building, your annual Fourth of July fireworks show too may become a blissful memory. Or so says Julie Heckman, executive director of the American Pyrotechnics Association, the leading trade association for the fireworks industry.
Fireworks bursting over Manhattan during Macy's famed July 4th show. Credit: AP
'Getting bleak'
"A few years from now, we may not have professional-display fireworks -- things are getting that bleak," Ms. Heckman said. The professional fireworks industry that produces large-scale displays sponsored by big-name brands such as Macy's and Disney is struggling to survive because of increased regulations imposed on the industry following Sept. 11, including duplicative criminal-background checks and increased site and facility security, Ms. Heckman said. The result is a spiraling outlay for marketers who foot the bill, a rising need for co-sponsors to defray the costs and a squeeze on local communities that may not be able to afford pyrotechnics.

According to stats from the APA, the amount of professional fireworks in the U.S. decreased 47.6% from 2000 to 2005, while consumer fireworks increased 150%. There were 152.6 million pounds of fireworks imported into the United States or produced domestically in 2000, and consumer fireworks accounted for 102 million pounds of the total. The rest were professional-grade -- those used in large displays run by licensed professionals. By 2005, consumer fireworks accounted for 255 million of the 281.5 million pounds of fireworks in the U.S., leaving only 26.5 million pounds of professional fireworks.

Brands and fireworks
Fireworks, of course, are integral to some of the largest brands. Walt Disney Co. uses fireworks every evening as a "kiss goodnight" to guests at Walt Disney World and Disneyland. And when new fireworks shows are launched at the park, they're treated like major attractions, said Craig Dezern, spokesman for Walt Disney Parks and Resorts.

For sports, pyrotechnics are "pretty much a guaranteed lock" to increased ticket sales, said Andy Dolich, president-business operations for the NBA's Memphis Grizzlies, who has worked with the Oakland Athletics and soccer and hockey teams as well. "Everybody loves fireworks. So it's a way to attract the largest demo that you can to your event, team or stadium," he said.

Corporate sponsors want in because of the demographic and the positive environment. "These shows have essentially the Good Housekeeping Seal of a smile on them," Mr. Dolich said.

Macy's 30th anniversary
And then there's the Fourth of July. This year marks the 30th anniversary of Macy's New York fireworks. "They are part of our DNA," said Martine Reardon, exec VP-marketing at Macy's, which, despite getting help from co-sponsors, still garners the most recognition from the show.

So dire predictions of darkened skies might be a bit premature -- for the big shows at any rate.

Macy's has felt increases in cost, but Ms. Reardon doesn't seem worried. "No matter what the costs are, we try to figure out how to make it all work," she said. "We're going to do the show no matter what." Other sponsors include Ballpark, Planters and Alliance for Downtown New York.

Sunoco Welcome America!, a weeklong Fourth of July party in Philadelphia sponsored by Sunoco, Coca-Cola, Southwest Airlines, Ben & Jerry's, Aramark and Purina, didn't see a cost-increase this year, in part because so many vendors are competing to do its fireworks show, said spokeswoman Barbara Grant.

Increased costs and regulatory issues
But increased costs and regulatory issues are a factor. "Our costs are increasing at an alarming rate, and sponsor dollars aren't matching that at the same rate," said Jim Souza, president of Pyro Spectaculars, Rialto, Calif., the company behind the Macy's extravaganza. "It's much more difficult to purchase the product, to ship and receive the product, to store the product, to repackage it and transport it out to the site, and then have the technicians out there to launch these wonderful spectaculars."

Mr. Souza explains that the drop in professional fireworks may be due to professionals using consumer-grade fireworks more and more, but he estimates the cost is up 30% to 50%, plus increased security and insurance costs on top of that.

Smaller communities and companies might feel the pinch.

Increasing minimum costs
Steve Frantz, a committee chairman of the APA and VP of the mid-sized public-display fireworks company Western Enterprises, Carrier, Okla., relies heavily on word of mouth. He pursues new business by researching markets that have existing shows, taking over the shows and expanding his business within those communities. Mr. Frantz said he has had to increase the minimum show budget from $3,000 to $5,000 because of increased costs after Sept. 11. He has lost business as a result of the increase, but is considering moving to an $8,000 minimum.

"If the situation continues the way it is, [it's] a very real possibility ... that small communities will not have companies that can provide the displays for them," Mr. Frantz said.